This guest post was written by Shannon Swift of Swift HR Solutions.  Thank you for your contribution Shannon!

You are the CEO, COO,CFO  or VP of Finance, or VP of Operations. You have a full plate, but you are also responsible for Human Resources.  Am I right?

As a VP of Operations you have projects to implement and an office to run.  As the CFO or VP of Finance you have a top line to watch and a bottom line to manage.  As the COO you have everything already mentioned and more than likely a sales organization to oversee.  And as the CEO you have it all and much, much more, as the buck stops with you.  So who has time for Human Resources?  Who has time for all that touchy, feely stuff?  Heck, who even has time to think about any of it today as we are all trying to do more with less?
 
You do, and you have to.  Why? Because, as the VP of Operations, you need strong, competent people to implement and manage those projects.  As the CFO or VP of Finance, you need a critical eye to examine ways to cut costs related to things like benefits and insurance without damaging morale, and someone to keep you compliant to avoid costly litigation and fines.  If you are the COO, you need everything already mentioned along with a solid strategic partner to help you with organizational design to put  the right people in the right places to ensure all are successful and, in turn, the Company.   And if you are the CEO, you need an experienced confidant and candid partner to help you through everything from layoffs to acquisitions and board meetings to executive coaching.  You need to know that every issue related to the success of your company that involves your people (which is nearly every one) is covered.

So, has your view of the value and need for Human Resources changed?  Been updated?  Been confirmed?  What do you need to know to put the right Human Resource program in place for your company?  Well, let's start with the stage of your company and go from there.

Top 5 things you need to know about Human Resources if your company is between 2 and 20 employees:

1.       Implementing best practices and philosophies early is the key to growing your company the right way.  What we mean here are things like foundational areas such as hiring practices, compensation and benefits philosophies, culture and values, etc.

2.       Ensure your benefits are in place and fit your company culture and budget.  A good Human Resource professional can help you do everything from implementing your first benefit package to evaluating an existing one to ensure you are getting the best value for the benefits you are providing and offering.

3.       Compensation is key to attracting and retaining the right people. Having a strategically thought out plan that fits your company's stage of growth, funding, and product stage, and is also competitive with the market, is key to keeping the team happy, as well as your investors.

4.       You never get a second chance to make a first impression.  Be sure that you have an orientation program that helps people quickly come up to speed on all the things they need to know to get started successfully.

5.       Have solid tools in place and an experienced resource to reach out to when you are in need of Human Resource support.  Attorneys are expensive, and don't necessarily fit your culture.  Accountants are not normally well versed in Human Resource requirements, so you need someone on your team who is focused on Human Resources and has the best tools to support you.  Utilizing a product like SwiftHR®-in-a-box affords the appropriate level of HR tools and resources needed in a cost-effective way for even the earliest stage employer

The Top 5 things you will want to consider if your company has more than 20 employees:

1.       If you currently have someone internally managing Human Resource ask yourself if they are tactical, strategic, or both.  If you have an Office Manager, for example, focused simply on tactical execution of the HR function, you likely are missing out on a number of important issues around such areas as compensation (including equity), benefits design, organizational design, leadership and executive coaching.  You may find that adding senior level Human Resource expertise leads to HR practices that more fully support business objectives and facilitate effective organizational growth.  This is a position ripe for outsourcing if you're not ready to absorb the cost of a full time professional.

2.       Make sure all of your executives and management are on the same page.  A good way to test this is to ask each what the mission of the Company is, along with the foundational values that drive the Company's behavior.  Will the answers be the same?  Ask them what the key business initiatives today are and what their role is in ensuring they are met.  Will they know?  Strategic Human Resources can help to ensure that these are clearly articulated and that all parts of the organization are aligning in the same direction.  Having everyone on the same page will allow the company to move toward success much faster and easier, and with fewer hiccups.

3.       Evaluate your compensation and benefits practices to make sure you have a defensible structure with strong evidence of internal equity.  Ensure that your capitalization table is up-to-date and that your underlying compensation philosophies are resulting in consistent hiring and merit procedures and outcomes.  Compensation is an emotionally charged area and one ripe for compliance and litigation problems.

4.       Review your Organizational Chart.  Look for areas that no longer make sense, or may indicate potential problems are looming.  Common problems include too many direct reports (i.e. > 5-7), a strong individual contributor who has somehow managed to build a large base of direct reports but has no leadership or management skills, functional sub-groups under the wrong group, "holes" in a department, or "equal partners" with no clearly defined authority points.  Keeping an eye on the organizational chart of a rapidly growing business and making corrections before they're needed is essential to effective execution.

5.       Know what your people care about. When you started out, the team was all young, single, and didn't care about things like health benefits or EAPs or even having a 401(k) plan.  Does the group still look the same now, 2 or 3 or 4 years down the road?  As demographics of the team change, the package offered should reflect the members you're trying to keep on board, and also those you're trying to recruit.

So where do you start in regards to getting your Human Resource initiatives on track or in place?  The best place to start, if you are an established company, is with a complete Human Resource Assessment.  This process and resulting document will help you determine and address areas of non-compliance, both state and federal, and will also identify areas of deficiency in best practices and gaps in your HR program.  Another consideration in your evaluation of how you're doing as an employer is to invest in a culture assessment.  What aspects of the Company and their job are important to your employees?  What do they say outside the company walls about the company? What would they do differently if they were in charge?  The answers to these questions are all things that help you as an executive anticipate and proactively avoid issues that could slow your company's progress down, or in the worst case scenario, bring it to a halt.
 
Tell us what you are doing to ensure Human Resources is a priority in your company.  What are you doing creatively that you can share with other executives?  What questions do you have that we might be able to answer?

Shannon Swift is the Founder and CEO of Swift HR Solutions, an HR Consulting firm that supports early and mid-stage companies in the Northwest through its talented Human Resource consultants and its SwiftHR® in-a-box product and surrounding services.  For more information contact Shannon at Shannon@swifthrsolutions.com or via phone at 888-768-5920  X701.

Is it crucial to maintain a competitive pay posture to attract and retain high quality talent?  We think so (that why we spent over a year writing a book about how to do it!), and most HR and rewards professionals believe that as well.  But does paying competitively make your people happy, engaged and/or driven to perform?  Generally not, unless you're using a well-designed incentive program to drive certain behaviors (but that only addressees the behavior component).

Competitive base pay is absolutely critical to attract talent, and to maintain a basic level of satisfaction with the compensation that employees receive for voluntarily sharing their skills with your organization.  Beyond base pay though, what really drives motivation, worker engagement and the desire to stay with an organization are how you manage and treat them.

See the table below and tell me what you think of the difference is between an employee who is willing to stay with your organization because they are basically satisfied (but not terribly engaged) vs. an employee who really wants to stay with your organization and believes in it (i.e. is engaged).

Source: Employee Hold'em, 2009

The data above is from a large study done every two years or so by by an organization that focuses on employee engagement, and the results are clear: it's not just about the money!  In fact, we would argue that how you manage and treat your employees is more important than the money, assuming the money is about where it should be (you're paying at least close to or better than competitively).

With dollars scare these days (over 50% of employers gave 0% - or less - pay increases last year, and 2010 pay increase budgets are south of 3% for now), how you treat your employees is even more critical.  Hence, there is a growing movement towards more qualitative rewards (feedback/communication, appreciation, training, etc.) , as opposed to just quantitative ones (mostly pay and benefits)

We'll continue to bring you more information and data on this large topic of worker psychology, qualitative rewards and employee engagement in the coming months.

Don't miss an opportunity to sign up and participate in these upcoming events:

Compensation, Rewards & Employee Engagement Trends - 2010 and Beyond (approved for 3.5 HRCI Credits)
Date: May 13th, 2010 8:00 AM to noon
Location: Bellevue Harbor Club
Cost: $295.00
Register for this Event

Organizations are struggling to keep up with changes in salary and compensation trends. As the economy recovers, what is the future of pay and employment? What can employers do to retain and re-engage talented employees? In this half-day session, participants will explore 1) the latest compensation trends and future rewards thinking and 2) the elements of a successful employee engagement and recognition strategy. Participants will take away low-cost tools, ideas and resources to build a culture of appreciation within their teams and organizations. Workshop instructors include StrategicPay Series creator, Doug Sayed and Chief Motivation Officer, Theresa Chambers of Recognition Works. The program will be held at the Harbor Club in Bellevue from 8am to noon. The program includes a continental breakfast, parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone, if interested.

 
Utilizing Market Data & Conducting a Competitive Pay Analysis (approved for 3.5 HRCI Credits)
Date: June 10th, 2010 8:00 AM to noon
Location: Bellevue Harbor Club
Cost: $295.00
Register for this Event

This half-day program will focus on how to conduct a market-based pay analysis, including selecting and using pay data sources, grading jobs into a salary structure and evaluating how the company measures up.  This is an advanced, in-depth course.  Participants will walk away with a working knowledge of the subject matter, as well as the tools and templates to execute in their company.  The cost includes a continental breakfast and parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone.

There have been so many fundamental shifts in the workplace and the employee-employer relationship in the past two decades that it's not only time for workers to reconsider how they manage themselves and their careers, but also time for us, as HR and rewards professionals, to relook at how we face today's workplace realities, which include:

• The death of job security as we (and especially our parents) once knew it.
• Fundamental shifts in loyalties, and in some case of trust, in the employee-employer relationship.
• The realization that all employees are responsible for their own career and are in effect, the CEOs of  "Me, Inc." (In other words, employees are responsible for managing their own career and professional development, not their employer).
• The job description for CEO of Me, Inc., includes a line that job security is primarily the CEO's responsibility, not their employer's (see Ann Bares' recent post "A Fundamental Shift in Talent Management: Will 'Active Job Security' Replace 'Passive Job Security'?").
• That employers now, more than ever, are responsible for creating an environment where their Me, Inc. employees will choose to keep their skill sets and performance focus.

Since Me, Inc. employees are primarily concerned about "Me" (that's you, not me!), most Me incumbents want to know details on the fundamental question of "What's in it for Me?" in their employment relationship. (I call it the "WIFM question").

In the "old days," employees worked for employers, and employers controlled virtually all aspects of the employment relationship.  In return, employees showed up to work nearly every day, did their jobs and generally enjoyed high levels of jobs security. That was the implicit contract: I take care of you, and you take care of me...

Today, employees must take care of themselves (and hopefully most labor force participants have figured this out by now), which means that most insightful workers are now working for Me, Inc., even if they are doing so at an employer's place of business.  Today, it's far more important than in the "old days" for employers to provide the favorable set of conditions for Me, Inc. incumbents, and to do so in a way that is productive and fruitful for both sides of the employment relationship.  With most of the implicit loyalty out the window, the dynamics of the employment relationship have changed significantly. Employers need to provide a reason (and hopefully several of them) for high-performing Me, Inc. employees to stay with them.

Translating these shifts into newer ways of doing business as HR and rewards professionals means, among other things, that your mode of communications must be enhanced to address the WIFM questions and the win-win relationship between employers and Me, Inc. workers. For instance:

• Instead of just informing employees about your compensation and rewards philosophy,  communicate it from a partnership perspective and explain why and/or how your philosophy benefits them too (back to the WIFM question).
• Rather than just expecting performance, clearly define what performance means for each individual, and how it is important and beneficial for the business and the employee to perform well.  Create a "win-win" strategy.
• Explain the performance-benefit linkage (the performance WIFM) between how high levels of performance benefit the employee as well as the organization.
• Continue to communicate the employer-employee value proposition, addressing the WIFM questions and how the employment "deal" is a beneficial one for both employers and their Me, Inc. employees.

As we're discussed recently on the StrategicPay Blog, there are not going to be a lot of extra fixed payroll dollars to throw around in the next few years, and so it will be especially important to focus more on the psychological and qualitative benefits of working for your organization.  These include developing and supporting a culture of appreciation and accountability; having a well trained, high quality, appreciation and performance-oriented management team, and providing learning and growth opportunities for your Me, Inc. employees in residence. Training and coaching managers to utilize the right skills and mind-set for this type of management style (communicative, supportive, collaborative, and yet accountability-driven) will be critical to successfully managing in the era of Me, Inc.

Another way employers can help create a positive partnership is to recognize and value the inherent stresses impacting workers these days. In today's hectic world, with working parents and crammed schedules, workplace flexibility is an especially valuable workplace benefit that costs little to offer. Those employers that can provide a trusting but accountable environment and that can manage to job expectations, rather than managing to specific times on a clock, will likely see benefits in lower turnover and greater loyalty and engagement among their professional and managerial staff.   (Yes, you'll still have to manage to the clock for your non-exempt employees).

Of course, offering a competitive compensation and benefits package is still very important in the "attract, retain and motivate" equation.  More important than the minimal extra dollars that most employers will be adding to their payroll budgets in the next few years, however, is the way your employees are treated and managed. The days of the "we own you" approach to management are numbered. The days of "we work together for mutual benefit" is where the world of work is heading for high-performing organizations.

Doug Sayed is principal for Applied HR Strategies, Inc. and developer of the StrategicPay Series, a series of "do it yourself" toolkits designed to assist HR and compensation professionals to develop strategic compensation programs on their own.

The StrategicPay Blog would like to re-welcome two guest bloggers: Robert Spencer has worked on change programs achieving more than $1B in savings for clients.  The information in this blog is based on a book he is writing, Change Made Simple; he can be reached at r.spencer@comcast.net.  He is joined in this series by Christy Martin who is a compensation consultant in Seattle, Washington.  She can be reached at christymartin@mindspring.com.  This is the second of a three-post series on making organizational changes.


More Mistakes to Avoid for Successful HR/Organizational Changes: Mistake #2

There are 6 mistakes organizations must avoid to have more successful change:
1.    Focusing on the Top Team
2.    Emphasizing Motivation
3.    Avoiding Resistance
4.    Too Much Productivity Loss
5.    Poor Sequencing of Changes
6.    Too Little Leadership Continuity 

Mistake 2: Emphasizing Motivation

Most sophisticated leaders and their consultants like to kick off major initiatives with a great deal of enthusiasm and excitement about the value of the likely results.  For example, implementing new performance management programs or a new mix of compensation features.  Characteristic of this behavior is a one-way 'dialogue' that emphasizes the leader's point of view concerning the promised results and importance of the initiative.  Often this further manifests itself as placing a premium on the leaders themselves to be 'cheerleaders' for the change program; in other words, leaders who are adept at promoting and selling the change.  "Heck, everyone should want to do this!"

Compounding this tendency is the positive response it typically elicits.  Certainly any project team worth its salt will respond positively, and often the top couple of layers of the organization will mimic this, especially if the political winds are blowing in that direction.  When the leader is concerned with the possible response, those closest to her or him can be powerfully reassuring.

The problem with cheerleading is that it is rooted in the logical, not the emotional model, of the change process.  Because there are benefits, people should logically want to be supportive, and may be intellectually.  But when we look at communications from the standpoint of the emotional process it is clear that something is ending for many people and this suggests that at some point they will experience a sense of loss and personal concerns if the change is significant.

Looking deeper into who wants to change the most, you typically find the people who are most enthusiastic about a given change are:  new to the organization (<5 years) or their role (<2 years), have already transitioned to a project role, and/or have no clear influence in existing social networks that determine how things get done.   In other words, people in the organization (or among its consultants) who have little to lose or change will tend to be the most enthusiastic.  This phenomena was captured well by Norman Mailer when he observed, "A person only becomes a conservative when he has something to conserve." 

Instead of cheerleading, the most successful leaders engage in change conversations.  Do they still allow themselves to be positive and enthusiastic about the change – certainly.  But instead of delivering a monologue, they engage in a discussion about what in fact may have to end with the new initiative.  Further, they also recognize that defining endings involves a discovery process and patience; they allow time and provide different avenues to surface concerns, and allow people to change their minds as their personal understanding evolves.

Successful managers understand there are different communications styles and use this knowledge to tease out what is happening to people.  As an example, consider the experience of one turnaround manager in trying to increase employee productivity.  Once she had shared the business imperative, she then reached out to employees and line managers to get their views on the obstacles and opportunities.  Instead of focusing the discussion on where she wanted to go, she engaged others on what needed to be done and how best to resolve what were sometimes chronic delivery problems.  She respected their views and the way they presented them, making her change an opportunity to create engagement and a dialogue.  The result:  in four months she was able to institute change initiatives that increased throughput by over 40% and even had shop stewards sharing their ideas for ways to get further improvement.

Robert Spencer will share #4, too much productivity loss, of the six mistakes in an upcoming guest blog with his collaborator, Christy Martin, for The StrategicPay Series Blog.

The StrategicPay Blog would like to welcome two new guest bloggers: Robert Spencer has worked on change programs achieving more than $1B in savings for clients.  The information in this blog is based on a book he is writing, Change Made Simple; he can be reached at r.spencer@comcast.net.  He is joined in this series by Christy Martin who is a compensation consultant in Seattle, Washington.  She can be reached at christymartin@mindspring.com.

Be More Successful Making Changes to HR Programs

Two underlying factors cause change programs to fail:
•    Too much stress or
•    Too little attention to internal politics, or
•    Both.  

While the mistakes can differ, organizations with failed changes often end up generating significant stress for those who need to change their behaviors. 

At other times, organizations ignore the social networks that exist, and serve to articulate and promulgate the real values of the organization. 

Together, stress and social networks serve to empower the anti-change agenda and undermine the desired change.

The reason why these factors (and several of the mistakes) are so difficult to manage is that they are often counter-intuitive, driven by the fact that the reality of the person driving the change is usually very different from that of the people expected to change.  But importantly, together they also constitute both a practical and moral imperative for any change agent or sponsor.

Figure 1, below, illustrates the change process as it is experienced by most project and change managers.  For them, change will unfold in a logical manner as the project is begun, then user capabilities go through a transition, and ultimately the change is completed.  There is nothing surprising about this … except that it is wrong!

Figure 1 Logical Model of the Change Process

Why is the logical model wrong?  It is wrong because change is an emotional, not a logical process that is not complete until emotional adjustments have been made.  Figure 2 below provides a view of this.  The process becomes emotional as people who are expected to change experience a loss of the way things used to be and wrestle with all of the insecurities or concerns that arise as they attempt to master something very different.  Figure 2 clarifies this process.

Figure 2 Emotional Model of the Change Process

How does this insight about emotions relate to the issues of stress and social networks?  First, the change process itself is very stressful and intensifies the emotional impacts experienced by those expected to change.  And as stress increases, the power and influence of informal social networks in the organization are increased.  Importantly, since these social networks define how work is actually accomplished within the organization, they can easily undermine the change and thwart expected results, especially over time.   Figure 3 illustrates some of the common factors that come to play and how they undermine productivity.

Figure 3 Factors that Erode Productivity

The implications?  HR professionals who make controlling stress and engaging social networks a priority in their organizations will contribute significantly to improved performance.  This is something that will otherwise be difficult for project managers and executives to master on their own, and points to a important strategic role HR professionals have to play in the creation of high performing organizations.

Robert Spencer has identified 6 mistakes organizations need to avoid for more successful change.  He will share 2 of the 6 mistakes in upcoming guest posts with his collaborator, Christy Martin, for this StrategicPay Series.

The StrategicPay Blog is very happy to have Paul Hebert of I-2-I and the Incentive Intelligence Blog as a guest blogger.  Paul is a leading expert on the application of incentive and motivational programs to various compensation and rewards programs.  To contact Paul, click here for more information.  Thank you Paul!

Even if you have Pay For Performance You Still Need Non-cash Incentive Programs

Pay for performance (P4P) is hot right now.  Companies struggling to rein in compensation expenses are looking at P4P as a solution.  Pay a base salary, and pay additional monies for performance over and above some benchmark.  That is an incentive.  It is the basic "do this- get that" structure.

But, if you have a P4P system in place do you need other "non-cash incentives?" 

My answer is yes.  Not 'cuz I sell incentive programs and associated awards (I don't – I sell advice on how to design the best influence programs.) 

You need additional non-cash incentive programs to guide the behaviors that lead to the "performance" part of P4P.

A Couple of Goals A Couple of Bucks

From my point of view, P4P typically focuses on a few goals that when achieved will increase the person's compensation.  However, most jobs encompass a huge variety of tasks.  Too much emphasis on one or two goals and the majority of other important tasks may suffer from the focus on the achievement of the cash-reinforced tasks.  Too much emphasis on a few performance goals can lead to some wide ranging effects.

The Atom Bomb

The best metaphor/analogy (I can never decide which is the right use) for this is…

P4P is like asking a pilot to bomb a weapons factory.  They load the plane, take off and go to the target.  They get over the target and at just the right moment they open the bomb doors and drop the bomb.  Hopefully it will be close enough that the power of the bomb used will take out the target.  It doesn't have to be right on target because the bomb's blast radius is big enough to hit the factory even if it lands a block away or 10 miles away –depending on the power of the bomb. 

An atom bomb has a pretty big blast radius so I don't need to be very exact if I want to take out the factory.  Think of some of the bonuses on Wall Street as atom bombs.

That's kind of how your P4P works if you allow too much to ride on one big incentive opportunity.  You can give folks a target to hit – and a big bonus (blast radius) – and they will do whatever is necessary to drop their bomb.  Unfortunately, because the blast radius is very large you risk a lot of collateral damage - unintended consequences.

A Smart Bomb

Contrast that with a laser-guided bomb.  It is physically smaller, with a much smaller blast radius.  But it is very accurate.

Even if you have Pay For Performance You Still Need Non-cash Incentive Programs

To make a smart bomb effective you need some system to adjust the flight of the bomb as it falls to ensure it hits the target.  Guided bombs have very complicated electronics and the ability to change their trajectory.  That's what makes them accurate.  But that's also what makes them expensive. 

Smart bombs trade the cost of collateral damage for the cost of accuracy.

You could try to convert your P4P atom bomb program into a P4P smart bomb program by guiding behavior toward a goal using a bunch of smaller cash awards that target specific behaviors based on individual skills.  But trying to keep up with very specific goals would mean adjusting compensation plans so frequently no one would ever understand how they were getting paid.

Remember, we're dealing with compensation – the stuff people use to pay for condos, cars and college.  Messing with compensation is serious business.  Most people need to plan and have some sort of understanding of what their next check will look like.  Not many employees can live the life of commission-only sales person who consciously takes on the risk of widely variable pay to achieve an overall higher level of compensation.

So in the P4P world you can either have a few very broad goals that can result in unintended consequences (as most plans do), or try to create many, many small goals that change frequently and create confusion and apathy.

Neither scenario is good.

Non-Cash Incentives

Non-cash incentives allow you to guide behavior without the same expense and confusion. 

Non-cash incentives guide behavior but because they are not linked to compensation, (or shouldn't be) you don't have to adjust compensation plans, worry about confusion or discrimination.  And - you get another benefit – non-cash awards typically have a higher "perceived value."  Non-cash awards tap into the part of the persons brain that imagines them using and having the item/trip – not just the dollar value of it.  It changes their relationship with the reward.  This can help decrease your overall cost.

Using non-cash awards as the guidance system on your P4P program will allow you to impact behaviors that drive results, reduce costs, reduce comp plan changes, clarify goals and allow you to adjust direction more often.

In other words, non-cash awards allow you to create a "smart bomb" and reduce the blast radius, increase the accuracy and avoid a lot of pitfalls associated with changing compensation structures.

Take a cue from our own military – what are they using more of today – atom bombs or smart bombs?

The StratigicPay Blog's primary writer is on vacation for the next couple of weeks, but that won't prevent us from supplying you with some of the thought leaders in the field.  Today's guest post is from fellow Compensation Cafe blogger Chuck Csizmar. Chuck is one of the several great writers at the Cafe'.

Why Managers Don't Manage Pay

When an employee is promoted to their first manager's position, they are given the proverbial Keys to the Kingdom – your company.  They now have the authority to spend your company's money.  From hiring, to promotions, to salary reviews and equity adjustments they are now able to make the decisions that directly impact (increase) your labor costs.

However, most of these managers turn out to be, at best, well intentioned amateurs at the process of making pay decisions that are appropriate for the needs of the business.   Fresh from being anointed they often lack the basic internal education necessary to make business vs. emotional decisions – and their actions commit you and the company to costs that may not be in your company's best interests.

Actions taken by these managers not only increase direct costs, but often irritate other staff members as the circumstances become known, creating morale and internal equity problems at the same time.  The net result is usually a corresponding lack of engagement and ultimately separations by disenchanted employees. 
 
Note:  Most employees leave managers, not companies.  Thus actions do have consequences.  Likely this is not what you envisioned when you made that promotional decision. Now, how did (fill in the name of your company here) get themselves into this mess? First of all, no one really trains managers on how to properly attract and reward employees via base salaries and incentive pay.  A few anecdotal examples:

• Just because some bloke is a good "XYZ Operator" does not mean they will be an equally good "XYZ Manager".  The skill sets for success are dramatically different.
• How many managers understand your company's philosophy about pay?  Do you?  How many understand the workings (the what and the why) of the company's pay practices and methodology?  These are the folks responsible for spending 40% to 60% of your revenue in the form of employee pay, and even the most well-intentioned is prone to make mistakes.
• Managers want to be liked; they do not wish to pick favorites, do not want to discriminate on the basis of performance and definitely do not want to have their decisions challenged.  They would rather point a finger at HR and assign the blame to them for having to assess performance and distinguish one employee from the other.  Left to their own devices they would give everyone as much as they can.

If you were a high performing employee, would you like to work for this sort of Manager?  If you were coasting at work, barely putting your time in, would you want to work for this sort of Manager?  Which sort of employee do you think will eventually tire of being undervalued, and quit?   Leaving the Manager with a staff of . . . .  You get the picture.

Ineffective managers are always afraid that an unhappy employee will decide to quit, but that is usually a selfish thought.   Their prime concern is more often what your departure would mean to their deliverables, to their reputation as a manager.  Your departure is typically viewed as an inconvenience to them, not an avoidable loss for the company.  A reflection of this is when managers resist a transfer that is clearly in the employee's career interests.  The manager's concern is how that transfer affects their department – and whether their personal success becomes that much more difficult to attain.
 
Ineffective Managers can be a defensive lot, challenging attempts at reform.  Why?  Because of their fear that spotlighting reform action will demonstrate their ineffectiveness (make them look bad), and that is unacceptable.  Typically their advantage within the company is that the more ineffective the manager, the stronger their political connections.   And as senior management oftentimes surround themselves with those most agreeable to their own way of thinking, it's not surprising.

Assuming the company's willingness to make key decisions and the presence of the all-important support from senior management, companies can correct the problems that they've created.  They can:

• Select candidates for management positions on the basis of their skills / potential for actual management (dealing with people, managing projects, business-oriented, professional demeanor, etc.)
• Educate Managers in the philosophy and methodology of the company's pay programs, ensuring that this information is shared with their staff
• Construct job specifications that call for a Manager to manage, as a prime accountability, limiting or even eliminating the retention of individual contributor responsibilities.
• Measure and reward the performance of the Managers  primarily on the basis of how they have actually managed their employees, or on the performance of their unit
• Encourage Managers to develop the potential of their employees, to the point that a staff member being promoted / transferred upward is a mark of success for the Manager
• Ensure that procedural checks and balances are in place to ensure that pay decisions are reviewed by at least one higher level
• Hold Managers to an annual salary budget; let them develop the budget and monitor/adhere to it during the year

Consider the above as a checklist that can be used to test your company's vulnerability to wasted money, employee morale problems / turnover and avoidable cost increases. 
Would you be comfortable with how your own company would score?

My advice to clients is to face these issues straight on, to implement policies & procedures that save money without penalizing high performers or mistreating their employee base.  But the challenge will always remain, as there is an inherent reluctance on the part of many managers to make the tough decisions, because we do want to be liked, we do like to give good news, and we do not like to play judge and jury with an employee's career. But that behavior is not managing is it?

This post is from derived from my recent post at the Compensation Cafe.

After more than two decades of slow but steady erosion and a few body blows in the recent recession, the state of job satisfaction, and more importantly the state of the overall employee-employer relationship, are at new generational lows. Employee morale is in the tank, and the willingness of workers to bolt at the next opportunity is at a multi-year high. Numerous studies have shown these trends, including the recent Conference Board report, which confirmed the multi-decade low in job satisfaction.

The 2008-2009 recession was a real punch in the gut to an already injured relationship between employers and their most "valuable" asset (at least that's what a lot of annual reports say). Between the massive layoffs, skimpy or non-existent pay increases (or outright pay cuts), and with the on-going push for "doing more with less," the foundation of the employee-employer relationship has weakened considerably over the years and is in need of some serious shoring up.

Some HR and compensation professionals have told me they think "engagement" is an overused buzzword. Even you may believe this, but just think about your typical "dis-engaged" employee and ask yourself how much value they bring to your organization?  Buzzword or not, having employees who are actively engaged in their work and believers in their organization and leadership is absolutely critical to organizational performance and maintaining a psychologically-healthy workplace, where people tend to thrive and stay.

So, what's an employer to do? How can we enhance this somewhat nebulous "engagement" concept?  If you're looking for simple/easy, "plug-and-play" solutions, they don't really exist, but here are several areas that merit your consideration:

• Increased/enhanced communication: nearly every broad-based or organizational study I've seen has shown a desire on employees' part for more communication, about their organization and their goals, and especially about their job expectations and performance. Communication takes some time and effort, but it's virtually free to provide it, so why do so many organizations fail in this key element of management and leadership?
• Increased transparency: who doesn't want to know how and why they are paid what they are? The more open you can be about your compensation philosophy/strategy, and how as an organization you're meeting the goals of your compensation program, the better off you'll be in the minds of your employees. Transparency fosters trust, while a lack of it may foster distrust.  If you have a soundly-built and competitive rewards program, what's to hide? Share the truth! I am not suggesting total transparency or gritty behind-the-scenes details, but if you've got a program you can be proud of, share it, and how your organization's' approach is a win-win for the organization and its employees.
• Recognition: recognition is the missing link in many rewards programs, and a failing of most management teams.  Can you catch your employees performing highly, going above and beyond, or notice those who provide great customer service on a regular basis? Are you ready and willing to provide genuine appreciation and recognition for/to your most valuable asset?  Recognition, a corollary of communication, is inexpensive to deliver, but can provide great psychological benefits for your workforce, and eventually to those who practice it genuinely.
• Listen, trust and empower: this may not come easy for some managers, but managers who can learn to listen better, trust in their staff, and delegate more responsibility and authority (and with the resources/tools to handle it) will find that most employees respond quite favorably to this approach. While some staff want to be led by the hand, most workers want to be heard, to have input into their work, and have the trust, resources and authority to get it done.
• Develop thy managers: Have you ever heard the phrase that people don't leave their jobs, they leave their manager (or company leadership)? Well, in most cases it's true. People tend not to leave managers and companies they respect and like working for, but they do tend to leave ones they don't believe in. Thus, it's critical that companies train and develop their management teams, as well as reward their best people managers, while dealing with the ones who aren't (see next point).
• Get your management performance act together: organizations that don't address performance issues within their management/leadership teams are destined to have morale and dis-engagement issues within their non-management ranks. Working for a poor manager makes your work life suck, is the single biggest contributor to turnover and poor morale, and is a guaranteed "engagement killer."
• Cash compensation: let's not forget that most folks are to at work trying to make a living for themselves and their families. But notice, it's nowhere near the top of my list. Dollars are very important, but you can't buy workplace love. If you were one of the many employers that engaged in wage cutting and other forms of pay-related retrenchment during the recession, then the first thing you should be thinking about is getting at least back to where you were prior to those cuts.  After that, it's time to start thinking (or re-thinking) about competitiveness with the external market for your talent. Paying competitively won't guarantee you anything, but it should reduce pay-related turnover, and enhance your ability to attract and keep talent. Don't believe that just because the labor market is a mess right now that it renders this topic as unimportant. Staying competitive always important, as there is always a market for top talent.  Several studies have shown that a high percentage (over 50%) of the workforce is ready to move onto the next opportunity when it presents itself, so don't help push them out the door by ignoring this critical aspect of the "employment deal."
• Developmental opportunities for professionals: when times get tough, training and development budgets are usually one of the first things to be cut. If that's the case at your organization, you should help to make it one of the first things to be restored. Beyond being appreciated, communicated with and paid fairly, the opportunity to learn, grow and develop is high on many people's importance list. A lack of growth and learning opportunities is a significant competitive disadvantage for any employer, but especially in the so-called "knowledge" industries (technology, scientific, engineering-related, etc.) where ongoing education and learning form the collective knowledge backbone of the organization.

Well, that's my list.  I'd like to hear your thoughts too.  Go forth and actively nurture satisfied, motivated and engaged workers!

Doug Sayed is principal at Applied HR Strategies, a Seattle area compensation consultancy and lead author of the StrategicPay Series Base Pay Toolkit, a hands-on, "do-it-yourself" (DIY) guide to developing a strategic market-based compensation program, complete with dozens of pre-built tools and templates, ready for use.

The Five Domains of High-Performance Organizations
i4cp identifies the five key areas in which High-Performance Organizations excel

Seattle, WA (January 21, 2010) - After conducting thousands of studies that cover hundreds of issues related to productivity and the workforce, one thing is clear: there is no single organizational element that is correlated with high performance. Rather, there are five.

For decades, the research team at the Institute for Corporate Productivity (i4cp) has studied what separates high-performing organizations from their lower-performing counterparts. The results of that research have consistently shown that companies that excel in the following five domains are typically high performers:
•    Strategy
•    Leadership
•    Talent
•    Culture
•    Market

In December, i4cp set out to clarify the differences between high-performing and low-performing organizations across these domains, and to determine whether certain issues or traits have increased in importance in the current economic climate. The results were interesting, if not startling. The gap between higher-performing and lower-performing organizations has widened considerably from previous studies. Based on a scale from 1 to 7, high-performance organizations scored an average of 6.03 across these domains, compared with 2.88 for low performers.

"High-performance organizations all seem to recognize that, while excelling in these five areas is critical, these domains need to work together as an integrated system," said Kevin Oakes, CEO of i4cp. "The culture should be focused on the customer and reflective of the organization's talent, which in turn feeds off the leadership, who need to be aligned with the strategy, etc. If one domain is ignored or inefficient, the system breaks down. This five-domain system also contains many important sub-domains - our members would recognize them as knowledge centers -that are just as critical to explore."

Specifically the new study found the following in each domain:

1. Strategy
High-performance organizations outscored low performers by 6.14 compared with 2.58 in the critical area of Strategy. In looking at specific areas of strength vs. weakness, it's clear that an organization's strategic approach is vitally important to high performance. The common wisdom of "walk the talk" is an indispensable ingredient in high-performance organizations. If an executive says one thing and then does another, employees draw a variety of conclusions, most of them destructive to the organization.

Executives in high-performance organizations avoid these problems by ensuring that employees are clear about the strategic plan and the company's approach to business, and by ensuring that managers behave consistently. The study shows that the single most widely cited strategic practice among high-performance organizations was, "My organization's philosophy statement is consistent with its strategy." And the strategic practice in which high performers outstrip low performers the most is "Organization-wide performance measures match the organization's strategy," followed by "Organization's strategic plan is clear and well thought out."

2. Leadership
In Leadership, the gap between high-performance and low-performance organizations was 5.96 compared with 2.47. The study found that one of the most widely agreed-on leadership-related strategies is ensuring that "Everyone is clear about the organization's performance expectations." Another important factor associated with high performance is "Making sure employees believe that their behavior affects the organization." Leaders can't do their jobs alone. They must be able to convince others of just how important their own behaviors are to the success of the whole organization.

A third factor that was strongly associated with performance was the idea that "Management promotes the person who has the best skills and knowledge to do the job." Performance tends to be higher in organizations where promotions are based on talent and merit rather than on other factors, such as organizational politics.

3. Talent
With high-performance organizations scoring 5.82 in Talent, compared with 2.73 for low performers, the gap between the two is certainly wide. High-performance organizations know that effective Talent Management moves beyond a focus on HR practices, processes and systems, to a strategic approach that is linked to business outcomes. This begins with stepping outside of HR and looking at the organization from an outside-in perspective. This entails identifying the business model components and areas that drive value, and determining what the organization needs. It enables organizations to take a holistic approach to treating employees as individuals, while managing and making decisions based on data-driven information, all of which benefit the organization as a whole.

4. Culture
The difference between high and low performers in the all-important Culture category is 5.99 compared with 2.94. Being seen as a "good place to work" is a solid indicator that an organization is a high performer in this domain. Not only is this characteristic the most widely cited by high-performance organizations, it's also the biggest differentiator from low performers. High-performance organizations are also well aware of external factors - such as customers, markets and competitors - and they are ready to take on new challenges. Another element of culture that's relatively strongly correlated with high performance is a commitment to innovation and internal fostering of creativity.

5. Market
High-performance organizations scored very high in market or customer focus (6.23) vs. lower performers (3.69). The research shows that high performance is associated with a strong emphasis on customer service, including vigorous efforts to serve customers better than anyone else in the industry. High performance is linked with the use of "Customer information as the most important factor related to developing new products and services." High-performance companies are usually organized internally around what's best for the customer, and their strategy is based on customer data.

"The study reaffirms i4cp's focus on its 44 ongoing research projects, and our discoveries to date on high-performance organizations," Oakes commented. "Throughout 2010, i4cp will be launching new iterations of its most important studies - on such topics as leadership agility, customer-focused workforces and strategy execution and alignment - to see which tactics, strategies and practices high-performance organizations are using in this economic climate."

The High-Performance Organization Survey was conducted by i4cp in December 2009. The full results of the survey are available exclusively to i4cp corporate members.

About i4cp, Inc.

i4cp is the world's largest vendor-free network of corporations focused on building and sustaining a highly productive, high-performance organization. Through a combination of peer networking, human capital research, tools and technology, we enable high performance by:
•    Revealing what high-performance organizations are doing differently
•    Identifying best and next practices for all levels of management
•    Providing the resources to show how workforce improvements have bottom-line impact
With more than 40 years of experience and the industry's largest team of human capital

WorldatWork Survey, January Update: Pay Cuts Not as Prevalent as Pay Freezes in 2009
 
January 19, 2010 – Washington, D.C. – In response to the sluggish economy, many corporations either froze or cut pay in 2009. Even as the economy starts showing signs of life, a majority plan to remain conservative when it comes to pay practices in 2010. The WorldatWork 2009-10 Salary Budget Survey, January 2010 Update (fielded in October 2009), found that 52% of U.S. employers froze pay for some or all employees in the 2009 recession, while 13% cut pay.
 
Will employees see their pay restored in 2010? At least 22% of organizations that froze pay in 2009 are planning to prolong the freeze into 2010, while 54% plan to resume normal pay activities this year. More than a third said they were in a recession (in October) and were not in a position to unfreeze pay.

 Of those organizations that cut pay, 37% said they remained in a recession and were not yet considering recovery actions; 29% planned to restore pay in full, while 15% said the pay cuts were permanent.
 
"Employers are taking a 'wait and see' stance when it comes to returning to normal pay practice," said Jim Stoeckmann, CCP, compensation practice leader at WorldatWork. "There are risks both ways. Moving too fast in restoring salaries and merit budgets leaves employers vulnerable if the recovery fails to materialize. Moving too slowly creates the risk of turnover as employees look for a better opportunity with another company. Even with jobs scarce, there are always opportunities for employees with the right skill set."
 
As salary budgets remain tight and employee satisfaction low, organizations are turning to other ways to motivate and reward employees. Employers are focused on providing or enhancing career development opportunities (33%), non-cash rewards and recognition (28%), leadership training on employee motivation (21%), flexibility options (20%), monetary rewards for high performers (19%), and monetary rewards for mission-critical talent (15%).
 
"With lower than normal employee satisfaction levels, it is crucial for employers to center the employee value proposition on the entire total rewards package," said Alison Avalos, research manager for WorldatWork. "Employers can cultivate employee loyalty by highlighting non-cash rewards, particularly for key employees. These programs validate the employee's time, effort and talent, even in the absence of salary increases."
 
About the Survey:
The WorldatWork 2009-10 Salary Budget Survey, January 2010 Update was fielded in October 2009. Survey respondents are WorldatWork members employed in the HR, compensation and benefits departments of mostly large U.S. companies. N = 875.